Substitute performance ordered where performance bond not provided

In this continuing litigation Cuddy Civil Engineering Limited was found to be in breach of its obligation to give its employer, Liberty Mercian, a performance bond. Cuddy had no assets and its defence was that it was impossible to obtain the bond or to persuade any bank or insurer to give a performance bond. 16 institutions had been approached and all had refused.

Held

When obligations are agreed between parties and it proves to be impossible to perform that obligation in due course, then if specific performance would have been ordered if it had been financially possible to perform, the Court may substitute a new performance in place of that specific performance.

The Court therefore ordered Cuddy to pay a sum of money into court equivalent to the value of the bond.

Comment

The Court has this power under section 19 of the Senior Courts Act, 1981. There were conditions as to the period for which the money should be held, the terms upon which it may be drawn down by the Claimants and when alternatively it would be repaid to the Defendants.